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US' flooding dollars must not be condoned: scholar

By Wen Sheng (People's Daily Online)

14:59, August 25, 2011

A leading Chinese central bank advisor said that the United States should not be encouraged to tackle its economic doldrums by endlessly printing dollars, as it would cause more problems for itself and the whole world.

Xia Bing, who is an academic advisor to the People's Bank of China and director of the State Council Development Center's financial affairs institute, said that U.S.' exceptional monetary policy of flooding the market with dollars would backfire, accelerating its own debt woes while exacerbating global inflation.

Xiao also suggested at a recent meeting with Netease readers that China needs to quicken the pace of "internationalizing" its Renminbi currency. He said that by 2020, if the Renmibi bills make 3-5 percent of the global reserve currency volume, "it will be quite a feat for China".

Now, China's currency has remained under tight control of the central bank, though Beijing hopes to move the Renminbi on a faster lane towards becoming a freely convertible reserve currency. The central bank and the Ministry of Commerce are reportedly considering ways to allow Renminbi investment in foreign lands, according to a report by the Yangtze Evening News.

Xiao said at the meeting that China should work in tandem with the United States and European countries to prevent their debt troubles from worsening, which would add to economic volatility and endanger globalization.

He admitted that Beijing had an arduous job to rein in price rises in 2011, and its four-percent inflation target set earlier this year could be elusive. In July, China's inflation surged to 6.5 percent, a record high in 37 months.

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（Editor：梁军）

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wende at 2011-08-2571.255.89.*: There is nothing China can do. Whether China condones or not, US is bound to print more money. China will have to think of a way to combat the situation. Speeches will not help as you are dealing with hoodlums who will not listen to talks.
ari.gon at 2011-08-2581.218.219.*: Mr Xiao is right but he has not managed to put his finger on the pulse of the problem. The same with Edmad although his intention is good. I am surprised that to date, not a single academician has highlighted what I am sure American academicians know but is keeping quiet about it. And that is this dependency on American consumption to drive the world"s economy is a flawed, and a dangerously flawed one at that, argument. If accepted that American is the engine that drives the world economy, then China and the rest of the world is in for a big, big problem. America is essentially bankrupt and has been for quite some time. It has postphoned its bankruptcy and its own recession or depression - whatever you may choose to call it - which is merely to say, it is postphoning the recession or depression of the world"s "open" economies linked to it. However, linkage aside, the recession or depression - essentially a corrective economic cycle - is purely America"s and should not be regarded as the world"s economic recession. Beijing MUST be very aware of this. Thus, this postphoning of this corrective economic cycle, or "bitter medicine", by Washington vide the unethical use of printing more U.S. dollars is rightly condemned, for it makes the lenders/investors pay for U.S."s growth. This is NOT acceptable. What Washington has done is play on the fears of Chinese, Japanese, and other countries" leaders of being drag into recession with the downturn or recession in the U.S.Beijing, like many other countries, MUST NOT be conned into succumbing to this fear for it means feeding this addict (the U.S.) - who cannot stop their habit of high living, lifestyles and welfarism - with our money. Beijing must not be afraid to pull out its money. It MUST pull out its money.It is for the U.S. own good. They must cease and stop their profligate expenditure on their military, welfarism, low taxes for their wealthy. All countries which invest in U.S. Treasury bonds and bills are merely financing their unsustainable expenditure. Like any addict which need to kick their habits, there must be a denial of more of the same, and the addict have no choice but to undergo the withdrawal symptoms. There is no other way. The U.S. must live within its means and and it MUST start taking austerity measures starting with its military and welfare expenditure.The longer, China and other countries continues to feed this addiction means the continued postphonement which means an ultimate crash of a very high degree. meantime, China, Japan and other countries continue to bleed from this misplaced fear and argument generated by Washington.Continued feeding this addict will not solve the problem but compounding it for the world. China and other countries must be strong and resolute to stand on its own two feet without the American economy anymore to drive the world"s economy for at least 7 years. That is the prognosis and there is nothing that will prevent the U.S. economy going into or being in a recession. Right now, the rest of the world are very foolish to continue putting money in the U.S. Treasury bonds and bills. The U.S. will not go under. It is a temporary period of sickness and recuperation. The world CANNOT continue paying for American"s need for austerity. Right now Beijing is being suckered and it is not really doing America any good. Sometimes, you just have to be firm with the patient. The patient has to help him/herself. Without self discipline, medicine, the patient will not get better. Europe has done better in this regard with leadership from Germany, Britain and France. Why has none of China"s academicians or economists talked about this current American malaise in this vein in English?It is not a "damned if do or damned if you don"t" situation. This is a false and misleading notion given by Americans with vested interests who wish to see China"s reserves robbed to sustain America"s unsustainable military, welfare, and lifestyle expenditures. Will Beijing have enough gumption to withdraw its money from an addicted U.S.? Their own people can see the problem. Why aren"t we?
ari.gon at 2011-08-25192.251.226.*: Mr Xiao is right but he has not managed to put his finger on the pulse of the problem. The same with Edmad although his intention is good. I am surprised that to date, not a single academician has highlighted what I am sure American academicians know but is keeping quiet about it. And that is this dependency on American consumption to drive the world"s economy is a flawed, and a dangerously flawed one at that, argument. If accepted that American is the engine that drives the world economy, then China and the rest of the world is in for a big, big problem. America is essentially bankrupt and has been for quite some time. It has postphoned its bankruptcy and its own recession or depression - whatever you may choose to call it - which is merely to say, it is postphoning the recession or depression of the world"s "open" economies linked to it. However, linkage aside, the recession or depression - essentially a corrective economic cycle - is purely America"s and should not be regarded as the world"s economic recession. Beijing MUST be very aware of this. Thus, this postphoning of this corrective economic cycle, or "bitter medicine", by Washington vide the unethical use of printing more U.S. dollars is rightly condemned, for it makes the lenders/investors pay for U.S."s growth. This is NOT acceptable. What Washington has done is play on the fears of Chinese, Japanese, and other countries" leaders of being drag into recession with the downturn or recession in the U.S.Beijing, like many other countries, MUST NOT be conned into succumbing to this fear for it means feeding this addict (the U.S.) - who cannot stop their habit of high living, lifestyles and welfarism - with our money. Beijing must not be afraid to pull out its money. It MUST pull out its money.It is for the U.S. own good. They must cease and stop their profligate expenditure on their military, welfarism, low taxes for their wealthy. All countries which invest in U.S. Treasury bonds and bills are merely financing their unsustainable expenditure. Like any addict which need to kick their habits, there must be a denial of more of the same, and the addict have no choice but to undergo the withdrawal symptoms. There is no other way. The U.S. must live within its means and and it MUST start taking austerity measures starting with its military and welfare expenditure.The longer, China and other countries continues to feed this addiction means the continued postphonement which means an ultimate crash of a very high degree. meantime, China, Japan and other countries continue to bleed from this misplaced fear and argument generated by Washington.Continued feeding this addict will not solve the problem but compounding it for the world. China and other countries must be strong and resolute to stand on its own two feet without the American economy anymore to drive the world"s economy for at least 7 years. That is the prognosis and there is nothing that will prevent the U.S. economy going into or being in a recession. Right now, the rest of the world are very foolish to continue putting money in the U.S. Treasury bonds and bills. The U.S. will not go under. It is a temporary period of sickness and recuperation. The world CANNOT continue paying for American"s need for austerity. Right now Beijing is being suckered and it is not really doing America any good. Sometimes, you just have to be firm with the patient. The patient has to help him/herself. Without self discipline, medicine, the patient will not get better. Europe has done better in this regard with leadership from Germany, Britain and France. Why has none of China"s academicians or economists talked about this current American malaise in this vein in English?It is not a "damned if do or damned if you don"t" situation. This is a false and misleading notion given by Americans with vested interests who wish to see China"s reserves robbed to sustain America"s unsustainable military, welfare, and lifestyle expenditures. Is Beijing that foolish not to see what is happening?
Edmad at 2011-08-25218.186.8.*: Don't forget who invented 'Capitalism' and 'Free Market'? They advocate its worthiness when the systems benefited them most, but now resort to underhanded methods when the 'chips are down' on their sides. The West is going 'bankrupt' but is asking the Asians to buy more of their IOUs and junk stocks time and again to preserve their powers, perks, jobs, lifestyles, military dominance, ....... Is this fair? They called you 'friends' when they need you, but painted you as an 'evil empire or enemy' when the odds are in their favor, or out of selfish concerns. Nonetheless, China is in a bind position in view of the global economic situation. China indeed is caught in a 'damned if do and damned if you don't' situation. But I am confident that the collective leadership of the CPC will have the wisdom to deal with them all.